Intraday trading involves short-term trading lasting less than a day, to make a profit from the financial markets. Various intraday trading strategies used by various traders are accompanied by many myths and beliefs.
Some believe that this is a way to get rich quick, which is not always true, while others believe that it is impossible to make profits from intraday trading in the long term, which is not always true.
Also, many traders put their emphasis on various intra-trading tools, which is not bad thinking. However, you need to establish specific objectives and related strategies before you start using those tools.
Intraday trading is a balancing act.
- To be successful in intraday trading requires immense dedication, hard work, patience, sharp intelligence and vast knowledge. Successful intraday trading involves 90% waiting and 10% execution. Therefore, yes, if the right procedures are followed, a trader can prosper in a relatively short period of time, and yes, if the right strategies are followed it is possible to capture profits in the long term.
- It takes a reasonable amount of time to specialize in day trading, enhance and establish trading skills.
- Theoretically, there are several intraday trading strategies. However, the success or failure of a particular intraday trading strategy depends entirely on the market. One strategy is working for market conditions today, but may not work according to the next day market conditions.
- An intraday trader needs to be very flexible and friendly.
- They need to practice strategies and work on their skills, and constantly adjust to new scenarios and adapt their strategies accordingly. In fact, the use of intraday trading strategies varies at different times of day, depending on how the market is behaving and how to deal with it.
- The intraday trader must be prepared to face unexpected situations and accept challenges.
- The intraday trading strategy used depends on the market conditions as well as the individual trading styles of the traders. Some traders are very active and do many trading during the day, with great amount of money, also catching the change of small value of the stock; While there are some who trade only on specific news programs or only trends they have researched well.
- Therefore, a strategy that works for a very active trader may not work for a less active one and the opposite is also true.
Top 7 Intraday Trading Strategies
Following are the top 7 intraday trading strategies that have been successfully used and implemented by intraday traders. However, the success of the strategies is quite subjective.
- Momentum Trading Strategy
- Intraday trading is dependent on momentum. It is about finding ongoing stocks. There are some stocks that show 20-30% movement every day. It is important to find these stocks before taking a big step and catching that step.
- Stock scanners can be used to find such stocks.
- These stocks with probable momentum have no close resistance above the moving average and have a high relative-volume volume. Mobility can be caused by fundamental catalysts such as earnings, but momentum can also be built without a basic backup and is called a technical breakout.
- Reversal Trading Strategy
- Reversal trading strategy is one of those intraday trading strategies that allows the opportunity to enter securities very close to support. As always stated, buy low and sell high, this trading strategy helps take a position on the securities very close to the support level and gives an opportunity to set stops.
- In reversal trading strategy the stop is always very close as the position is to be taken to the nearest high or low. This helps provide a good risk-reward ratio. Reversal intraday trading strategy lowers the bar and highs the success rate, who does not want that!
- GAP and GO Trading Strategy
- Gap and Go! The intraday trading strategy focuses on Gappers. Gappers are securities that show a difference between prices on the chart – when the price moves up or down but there is no trading on the price. The difference can be made by various factors such as announcements, any other type of news release or a change in the outlook of analysts.
- Gaps occur early in the exchange due to differences in demand and supply and are quite common.
- Gap is used by experienced intraday traders to make profits, which is what led to the establishment of consolidation. Gappers are inspected in the first hour of trading and a limit is established; Moving above the range signal indicates a buy and a sell below the range signal.
- Bull Flag Trading Strategy
- The flag pattern is formed when the value of the shear moves an explosively strong move, which forms the pillar of the flag, followed by a systematic and diagonally symmetric pull, which forms the flag. When the resistance line breaks in the flag, it advances the next step of the lion’s movement and the sensation advances.
- The bull flag, in particular, shows a strong price increase that reaches its peak and then pulls back into an orderly behavior where the high and low levels are parallel to each other. In the beginning the Bulls flags move at tremendous speed as the Bulls move out of practice, blinding the Bears.
- Pullback Trading Strategy
- Pullback is a term used to describe a short-term move in securities in the opposite direction of a long-term trend. This allows an opportunity to join the trend without following the securities.
- In the world of intraday trading, it is often said that ‘the trend is your friend’, which is quite true; However, the pullback intraday trading strategy helps traders avoid drowning while following the trend. First, it should be clearly understood that the pullback is actually a pullback and not a reversal of a trend.
- Breakout Trading Strategy
- Breakout means entering the market when the price goes out of a particular price range, it has its own support and resistance.
- It occurs with an increase in volume. Traders use the technical indicator Volume Weighted Moving Average to understand and capture breakouts. The keyword for a breakout trading strategy is fast.
- Moving Average Crossover Strategy:
- The average crossover intraday trading strategy is basically a price crossover strategy.
- When the price of a security moves above or below a moving average, it indicates a possible change in direction. This strategy eliminates all emotions. This clearly shows a change in momentum when the price of the securities crosses from one side of the moving average to the other.
- The moving average signal shows a crossover below the downtrend and a crossover uptrend above the moving average. Another type of crossover occurs when the average of a shorter duration crosses the average of the longer duration.
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Dr. Viibhor Agarwal has a Ph.D. in IPR, start-ups, and corporate law, as well as an MBA in finance from NMIMS Mumbai, and achieved numerous certifications in corporate law. He is a practicing corporate lawyer and the founder of two business verticals. He has advised over 2000 businesses, 5000 students, and 400 new start-ups all over India and other countries like Dubai, London, the USA, and Qatar. Dr. Viibhor Agarwal assists people with business expansion and branding, regardless of size, as well as business setup, financial literacy, start-up guidance, licensing, tax planning, and other legal compliance issues. Dr. Viibhor Agarwal’s goal is to provide complete financial and business literacy to all businessmen who want to start new businesses and grow existing businesses and to those students who want to open their start-ups. In each video, Dr. Viibhor Agarwal not only explains the method of the solution but also advises subscribers on practical tips learned from and faced by clients handled by Dr. Viibhor Agarwal daily. This blog portal provides you with an easy and clear solution to your business problem, allowing you to take your business to the next level.